Balance Sheet Actual-to-Plan Variance Reporting compares a company’s actual balance sheet figures to its planned or budgeted amounts, highlighting any discrepancies and providing insights into financial performance.
Primary Implication
Protect yourself from the problems associated with angry creditors and investors by ensuring your assets work harder than you do, or you will have cash flow problems.
The best reporting tool for doing this is your Actual-to-Plan Balance Sheet variance report. Use this tool to see how your business is doing across your top four P&L Statement items, core Balance Sheet, and select financial ratio results to isolate business issues you must fix.
Overview
The primary purpose of your Balance Sheet is to communicate the ownership split on the assets used in the business to generate sales at a profit. If liabilities are significantly higher than Owners’ Equity, that indicates the creditors have a higher claim against the assets of the business than the owners do.
Your Balance Sheet changes each month along with your P&L Statement. While fixed assets and long-term liabilities only change when a significant asset is purchased by debt or sold for cash. In contrast, your Equity, cash position, and current liabilities are shaped each month by your P&L results.
Confirming how hard your assets are working for you is done through your Actual-to-Plan Balance Sheet variance report. This report is critical if you have used debt to acquire assets. Looking at your P&L and Balance Sheet actual-to-plan variance reports helps you identify what isn’t working before you struggle to repay those you borrow from.